Nobody decides to live a financially unstable life. In simpler terms, nobody plans to be broke and it just happens that we have a lot of broke people out there than the financially stable ones.
It might amaze you that young people with nice paychecks also fall under the
‘I am broke” category.
Being broke is not about not having a reliable source of income, it is about bad investments, poor spending attitude, poor saving attitude, etc. being broke will always have you living in debts.
If you’re tired of being broke, then now is the time to tackle it. Take control of your money. It is either you work on spending habits, learn how to save, find ways to earn more money, etc.
The new year is coming in and you can’t sing the song of being broke again.
So, I’ll be sharing 10 things you could do to stop being broke in 2021.
9 Ways To Stop Being Broke In 2021
1. Learn To Live Below Your Means
Spending more than what comes into your pocket will only leave you knee-deep in debt no matter how much you earn.
You don’t need to keep up appearances that everyone forgets about the moment you leave the scene. The appearance you strive to match only lives in your head.
It is irrelevant trying to prove to anyone that you can afford a certain lifestyle. Stop worrying about what they think and start to worry about how you can live within your own means.
Deactivate cards, not in use and make use of your cards only when necessary.
Change your attitude towards trending things on fashion, home-style and so on. They will only fuel your desire to spend some more.
Live below your monthly income, that way, you’ll have something left to go into your savings or emergency funds at the end of each month.
2. Learn A Skill
You’re broke because of two main issues:
- You earn a little,
- You spend more than you earn.
If you don’t earn enough, you cannot save money. It is impossible to keep what you don’t have.
The first step to stop being broke is to develop money-making skills. Have a skill people are willing to pay for.
There are more skill problems out there than money problems. People are always willing to pay for something. Develop your writing skill if you love to write, if you have a thing for logical reasoning, try your hands on coding, as a lover of art, you can try video editing, graphics design and so on.
Just position yourself where you can learn and earn more.
Either you earn a little or spend more than you earn, creating another stream of income should help you balance your current financial struggle.
3. Get Better At Your Acquired Skill
If you have learned lucrative skills and still find it difficult to make a decent living from it, one of these two things are wrong:
- Your skill is not good enough for people to pay for it;
- Your marketing skills need some brush-up
You need to leverage on digital skills to reach a wider audience. Add content marketing as well as social media marketing to your skills so as to reach more prospects for your business.
4. Only Lend Money You Can Afford To Lose
If you have never had a bad or terrible experience lending money to people, don’t wait to have it before you learn.
Only lend people money you can afford to lose without breaking a sweat.
When they appear to be people close to you, then avoid lending them money at all.
You may end up losing your money and the relationship with the person.
It’s totally ok to lend a helping hand to someone in need, but that should not be to your own detriment.
Lend only what you can let go.
5. Use The 50/30/20 Rule n
Elizabeth Warren popularized the ’50/20/30 budget rule’ in her book, All Your Worth: The Ultimate Lifetime Money Plan.
The logic behind this rule is that 50% of your net income should go toward “needs”, 30% should go toward “wants”, and the remaining 20% should go into savings.
“Needs” would include things like groceries, prescription medications, rent, and insurance.
Some examples of “wants” are Netflix, cable, and manicures. You may not necessarily hit the exact numbers but work towards splitting your earnings around that percentage.
To make this feasible, I always advise that you set aside the 20% on your savings before any spending takes place.
If you do not exceed your spending for the month, roll it over into your savings and if you do, wait till the following month.
You have to put your discipline on steroids to effect this.
6. Stop Buying On Impulse
Impulsive buying will only trigger temporary gratification and will put you in more trouble than you can ever imagine.
You’ll keep getting many ways to spend your money but few ways to make such back. After such purchases, you’ll keep wondering where your money went.
I learnt to do something for myself, and that is telling my money where to go rather than wonder where it went.
Have a budget and know what you’re spending every penny on. Know what your end goal is and go after it.
7. Avoid Debts As Much As Possible
It is funny to know that people take loans to pay debts. That is getting into more debts to solve debts.
Avoid debts as much as you can and don’t accumulate more than you can pay back in a reasonable time.
Only take loans where there is completely no other way out and make sure there is a working plan to pay it back.
8. Stay Away from Get-Rich-Quick Scheme
These schemes will only make you poorer in record time.
They may come off as investment options with high returns and great risks but in the end, it makes a few people rich and a whole lot of people very broke.
Investing is a great way to grow your money but make sure you’re putting your money in the right business.
Schemes with no proper working pattern are one of the ways to get broke quickly. It’s better to save your money without interest than to get run down by trying a shortcut to riches.
9. Let Go Off Friends That Encourage Negative Habits
It is general knowledge that you’re a product of whatever company you find yourself in.
Make a list of your friends and put them into two categories:
Toxic and Non-toxic.
You’ll come to realise that some people you spend your time with are not worth it anymore.
You find yourself doing the most you’re not supposed to do after every hang out with them. The exact things you promised yourself you were done with are things you find you end up doing.
Free yourself from such friends. I am not saying you should cut them off completely but keep a healthy distance.
You can’t be around people that will constantly make you spend money without adding value back to you.
Try spending time with more frugal people. People who understand the workings of money as well as the right attitude to spending.
The habit you develop with money when you earn a little is the same energy you’ll put up when you earn a lot. If you cannot and do not plan your spendings with a little, getting additional 10 streams of income will leave you as broke as you were with one stream of income.
It will also leave you with more responsibilities and commitments that will be difficult to keep up with.
Start now by developing financial intelligence. Be money smart and spendings wise. Make the decisions that will make your future self proud of you. As you go into the new year, make yourself accountable for your money decisions, increase your earning ability. The goal is to retire early, not to slave for long and keep on paying bills. I hope this post will help you make the right money decisions in the coming year.